Time for some honesty on pensions

Examination Yuan officials at the time knew that the replacement ratio could not exceed 70 percent, and they were aware of the problem of the aging population and the declining birthrate.

They said that these were the reasons why they had to amend the retirement system to resolve the government’s massive financial burden, which was the result of the huge pension payments, and to be able to encourage government employees to retire at a later date to deal with the problem of an aging population.

In other words, the 70 percent cap was a promise made by the Examination Yuan to gain the public’s trust. Having won that trust, they promised to amend the law to protect the national treasury from bankruptcy.

Disregarding public trust, Examination Yuan officials, led by then-president Kung Te-cheng (孔德成) and then-civil service minister Chen Kuei-hua (陳桂華), played a dirty trick. While nominally adding a 70 percent cap to the replacement rate in the amended system, they allowed the new and the old system to overlap, doubled their basic salaries and offered benefits for early retirement along with other tricks that raised the replacement ratio of some officials to an absurd 140 percent.

The amendment was passed by members of the legislature elected in 1947, just before their retirement in 1992. The result of the amendment being passed was the exact opposite of the national goal that the officials at the Examination Yuan had promised, although it did meet their personal goals. Government expenditures exploded and their retirement age decreased sharply.

To stop procrastinating and cutting the replacement rate to 70 percent in one fell swoop is not a matter of the state going back on its pledge to protect the legitimate expectations of civil servants. On the contrary, it is a matter of fulfilling the public’s legitimate expectations by fulfilling a pledge.